IMPROVING URBAN WATER QUALITY WITHOUT TARIFF IMPACT
Autores y e-mail de la persona de contacto:
José Antonio Palomero González ([email protected]) 1
Francesc Hernández Sancho1
Javier Macián Cervera2
Departamento:
Grupo de Economía del Agua1
Aguas de Valencia2
Universidad:
Universidad de Valencia
Área Temática:
Sesión Especial de Economía del Agua
Resumen: (máximo 300 palabras)
Water is essential for our lives and activities. However, not everybody can drink water
without any health risks. Water is treated to reduce the physical, chemical and
biological parameters that generating risks. This article proposes improving water
quality using cost functions in order to find the best option to provide the best quality
with the least impact on cost and water tariff.
Palabras Clave: (máximo 6 palabras)
Cost Functions, improving water quality, water tariff
Clasificación JEL:
1-. Introduction
Water is essential for our lives and activities. However, only a few people in our world
can drink water without any health risks. According to the European Directive
98/83/EC, clean water is defined as: "all water either in its original state, either after
treatment for drinking, cooking, food preparation or other domestic purposes, be
regardless of its origin and whether it is supplied through a distribution network, from a
tanker, or in bottles or other containers ".
There is much information about drinking water quality in the literature: about source
and pollutants distribution in water distribution networks (Allen et al. 1977; Clark et al.
1993; Marín-Galvín et al. 2015) and control systems pollutant dispersion (Cohen et al.
1992; Godé et al. 1997). Currently, there is a new drinking water supply management:
Water Safety Plans, which aims to ensure the safety and drinking water quality
supplied, focusing on ensuring water quality through monitoring systems and periodic
evaluation of service (Davidson et al. 2005; Matía et al. 2008; Bartram et al. 2009).
The water purification treatment is divided into four stages. The first stage consists
of pretreatment, oxidation and disinfection. The second stage consists of coagulationflocculation and decantation. The third stage is filtration. The final stage is a residual
disinfection, and then it is pumped to incorporate it into the supply network. All these
treatments have costs: Investment costs and Operation and Maintenance costs. The
Water Framework Directive, in Article 9, shall take into account the cost recovery
principle in water-related services, including environmental costs (European Directive
2000/60/EC)
To predict the costs of enhancements before implementation, we usually use the cost
functions. The Cost Functions are defined as mathematical equations to estimate costs
before implementing the measure or action. We have chosen cost functions in order to
obtain easily, quickly and reliably Operation and Maintenance costs and Investment
costs. Cost Functions are usually used in the design phase to compare different
alternatives or measures to be able to choose the greatest net benefit possible, before
planning the measures and their implementation, to show the relationship of costs based
on variables. The functions usually used to obtain cost functions are:
Linear (
),
2
Exponential (
Logarithmic (
), and
).
The cost functions are based on: historical data and critical variables (those have greater
contribution to total cost). The variables should be quantified according to their
importance using coefficients to give greater weight to the most important variables.
Cost functions are used widely in literature from many water fields, as an example in
water quality management simulation (Li et al. 2012) or to develop water supplies and
sanitation technologies (Ketema et al. 2015). Cost functions are very useful for
modeling wastewater treatment cost (Papadopoulos et al. 2007; Hernandez-Sancho et al.
2011; Tsagkaraki et al. 2013). However, there are not many references about cost
functions applied in water purification treatment and drinking water distribution in the
current literature, only an example of some water technologies to improve water quality
in the Environmental Protection Agency (EPA) Water Office (EPA Water Office 2005).
In order to pay the water cost service, it is necessary to establish the water tariff, which
is defined as the amount fixed by the administration as compensation by users for
obtaining supply service water suitable for human consumption. The water tariff aims to
achieve price that promotes a responsible, equitable consumption and promote water
saving. The main objectives of tariff are: cost recovery, reducing consumption and
equity-justice. The water tariff design is complex, as this is about achieving various
goals that often are conflict (Maldonado-Devís et al. 2013).
There is much information about water tariff in the literature, for example: there are a
lot of studies about water pricing practices and market water tariff (OECD 2010, Gistau
2010; Ozeki 2013; Blanco-Orozco et al. 2015); about water tariff social impact (Arbués
et al. 2012; Gonçalves et al. 2014); and water tariff efficiency, cost recovery and
sustainability (Cole et al. 2012; Hoque et al. 2013; Zetland et al. 2013; Grafton et al.
2015)
Water tariffs are composed of two parts: a fixed part (the price that you pay to have
water service) and a variable (the price per cubic meter for consumption). The most
common tariffs in the Mediterranean area are tariffs with two parts: fixed part and a
variable part by blocks. Within variable part by blocks there are two variants: the IBT
and the IRT. With IBT variable block you pay the first cubic meters according to the
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price of the first block and those who go over are charged with the price of the second
block. In contrast, with IRT variable block you pay for every cubic meter consumed the
same price as the last cubic meter consumed. If that last meter consumed is an upper
block, all consumption is paid at that price. Choosing an IBT or IRT variable block part
depends on what purpose it is intended to achieve. There is no regulation or
organization to establish criteria to define the water tariff, leading to a wide variety of
tariff systems (Martínez-Espiñeira et al. 2012).
The drinking water price in Spain is lower compared to other countries of the
Organization for Economic Co-operation and Development (OECD) as shown in Figure
1: Price per unit water supply and sanitation services to households including tariffs (in
USD per cubic meter) in OECD countries.
Figure 1: Price per unit water supply and sanitation services to households including
tariffs (in USD per cubic meter) in OECD countries. Source: Organization for
Economic Co-operation and Development 2010
2-. Objectives
The aim of this paper is to improve water quality with the least tariff impact. To do this,
we are going to choose some technologies that guarantee water quality, and we are
going to use cost functions to know their costs. Then, we will see the impact on the
water tariff.
3-. Methods
4
The drinking water quality is defined in the literature as all drinking water that satisfies
the quality parameters and has not negative effects on consumers' health. In this article,
we define water quality enhancements when this improving ensures a reduction of
physical, chemical and biological parameters that generate risks, including nonmandatory parameters to minimize health risks.
We are going to use the cost function provided by the EPA Water Office. EPA Cost
Functions are logarithmic equations designed to obtain the costs based on design flow.
These equations are obtained using three models: Very Small Systems Best Available
Technology Cost Document (VSS model); Water Model and Water and Wastewater
Cost. These functions were obtained by statistical and mathematical data with historical
data. The model results have been incorporated by the information technology sector
and manufacturers (EPA Water Office 2005).
To Investment costs have been divided into three main components: process costs; the
engineering costs and construction; and finally the indirect costs. The estimation of total
capital costs is based on processing costs, which are then multiplied by a factor of
specific costs to estimate direct costs of capital. A cost factor of 2.5 is used for systems
less than 1.0 million gallons per day (mgd) and a cost factor of 2.0 is applied to systems
of more than 1.0 mgd (EPA Water Office 2005).
The Operation and Maintenance costs represent the annual costs required for the
operation of the technology. These include: labor, chemicals, energy and spare parts.
The Operation and Maintenance costs are the sum of each of the components, no
weighting factor (EPA Water Office 2005).
To use the EPA Cost Functions, it is necessary to know the design flow. Then, we use
the cost functions to obtain the Investment costs and Operation and Maintenance costs
associated with this technology. All the costs obtained from EPA Cost Functions are in
gallons/dollars. To make easier the results comparison, we have changed the gallon
units to cubic meters; and we change and updated the dollar price of 2005 euros to those
in 2015. The Changing tariff of US dollars to euros was taken on December 22, 2015
and it was $1.00 which equates to €0.91.
After knowing all the costs to improve water quality, it is necessary to calculate or
modify the water tariff. Usually, the best option is modifying the water tariff because is
easier, faster and it is already accepted by society and administration. It is not necessary
5
modify the entire water tariff. We could modify some parts, for example: the investment
parts or the fixed part or the variable part. The most common modification is increase
and adjusts the parameters required in order to raise the money to finance the
enhancements with less social impact. It is important to remember that operating and
maintaining costs graphics are obtained in $ / year. To make the Investment costs
calculation, it has been updated to 3% interest and a costs recovery period of 30 years as
the law's recommends (Law 27/2014 BOE).
4. Statistical Information
All data have been obtained from EMIVASA (Empresa Mixta Valenciana de Agua
S.A.), the Water Company that supplies Valencia (Comunidad Valenciana, Spain). To
know the water supply system, we will choose the year 2015 as a representative year. In
Figure 2 we can see the drinking water uses. In Table 1 we can see the Water Supply
Data Service in 2015: number of subscribers, checked volume and annual consumption
(m3/subscriber year)
Figure 2: Drinking Water uses. Source: EMIVASA
Water Supply Data Service in 2015
Number of subscribers
434,115
Checked volume
41,602,299 m3/year
Annual consumption (m3/subscriber year)
95.83 m3/subscriber year
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Table 1: Data Water Supply Service in 2015. Source: EMIVASA Annual Report 2015
There are two water purification plants that it supplies the city: Water purification plant
“La Presa” (which has 3 treatment lines: Baja, Alta I and Alta II) and Water purification
plant “El Realón” (one treatment line). In Figure 3 we can see the Valencia Water
purification plants localization in a schema. Both plants have a standard treatment
(pretreatment, decantation, filtration and chlorination), both have intermediate
chlorination, present active carbon filters and use the same reagents, the same design
flow (3 m3/s), and each one serves half the city. The difference in the processing line is
“La Presa” uses UV disinfection in all the treatment lines, and the 3 subtreatment
lines in Water purification plant could treat: 1 m3/s between the lines Baja and Alta I,
and line Alta II could treat 2 m3/s by herself.
Figure 3: Valencia Water purification plants Schema. Source: Authors.
In Figure 4 we can see the percentage of taxes and the water price from a water bill.
This water bill includes the water price and a number of taxes that are associated with
water, even though they are not related. The water bill breakdown is 36.98% Water
Price and the rest Taxes (Diario Oficial de la Comunitat Valenciana, 2012).
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Figure 4: Water Bill composition. Source: Own Elaboration.
5. Results and discussion
We are going to calculate the Investment cost and Operation and Maintenance costs for
two technologies, ultraviolet disinfection for “El Realón” and nanofiltration for both
plants. To meet the drinking water quality explained in Method Section, we choose
these technologies because they represent a great enhancement in water quality and
minimize risk to human health. Then, we are going to justify why we chose these
proposals for enhancement.
We choose ultraviolet disinfection because allows improve the water disinfection,
reaching pathogens resistant to the various forms of chlorine disinfection.
Also ultraviolet radiation leaves us free to reduce chlorination dose. Reducing the total
dose of chlorine indirectly improves the taste and odor of water, which are the most
important water quality parameters for users.
The second technology that we choose is a nanofiltration system. We choose this
technology over other possible membrane separation techniques because it separates
organic compounds such as pesticides, heavy metals and pollutants that can be
dissolved in water (these compounds have harmful effects on human health despite
being in very small concentrations), minimizing human health risks. In addition, the
lime concentration in the water would be reduced, reducing the incidences of lime scale
in appliances such as washing machines, dishwashers and piping. It will also improve
the organoleptic (taste and smell) of water.
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Table 2 shows the costs for UV and nanofiltration for our design flow: 3 m3/s. Also,
we propose a nanofiltration system for line Alta II of “La Presa” because it treats the
most flow (2 m3/s). The process to obtain the costs is explained in the Methods section.
Ultraviolet Step for 3 m3/s
Operation and Maintenance
costs
2,371,838.31 €
115,135.32 €/year
2,751,399.39 €
Investment Costs
Nanofiltraton Step for 3 m3/s
Operation and Maintenance
costs
266,389,772.38 €
12,931,265.30 €/year
47,024,171.63 €
Investment Costs
Nanofiltraton Step for 2 m3/s
Operation and Maintenance
costs
191,134,201.39 €
9,278,160.51 €/year
37,922,551.44 €
Investment Costs
Table 2: Enhancements costs summary. Source: Own Elaboration
Now, we are going to combining previous enhancements in four proposals to obtain the
best water quality with the least health risks and the least social impact. The first
proposal includes the installation of UV disinfection and a nanofiltration step for 3 m3/s
flow at “El Realón” and a nanofiltration step for 2 m3/s flow at “La Presa”; the second
proposal is the same like the first one without UV disinfection; the third proposal
includes installation of a nanofiltration step for 3 m3/s flow at both Water purification
plants; and the last one, the fourth proposal is like the third one with UV disinfection for
“El Realón”.
To finance the proposals, we are going to modify the current tariff as we explained
in the Method section. We choose these tariff parts: City Hall Investment, the Service
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fee and Consumption fee. This calculation does independently of tariff increases such as
increasing operating costs and IPC. In table 3 we see, in one column the current tariff
part, and in the other the same tariff part modified to finance the proposal.
Tariff modified to Proposal 1
Current Price
Cost Recover Price
City Hall investment (€/month)
0.90
1.33
Service fee (€/month)
5.43
5.63
Consumption fee (€/m3)
0.55
0.91
Total Increase: 0.99 €
Tariff modified to Proposal 2
Current Price
Cost Recover Price
City Hall investment (€/month)
0.90
1.30
Service fee (€/month)
5.43
5.63
Consumption fee (€/m3)
0.55
0.91
Total Increase: 0.96 €
Tariff modified to Proposal 3
Current Price
Cost Recover Price
City Hall investment (€/month)
0.90
1.41
Service fee (€/month)
5.43
5.66
Consumption fee (€/m3)
0.55
0.96
Total Increase: 1.15 €
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Tariff modified to Proposal 4
Cost Recover Price
Cost Recover Price
City Hall investment (€/month)
0.90
1.42
Service fee (€/month)
5.43
5.68
Consumption fee (€/m3)
0.55
0.96
Total Increase: 1.18 €
Table 3: Increase the price of water for the recovery of costs. Source: Own Elaboration.
In all the proposals, it is possible improve water quality with an increase around 1€ per
month (sometimes a little bit higher). This little increase does not entail a drop in water
consumption because water has an inelastic demand. This small increase in the water
tariff would improve water quality much with minimal impact. In addition, water price
in Spain is low as mentioned in the Introduction, so a small price increase would not
influence society.
The first thing is the low UV disinfection price. With only 0.03 €/month it is possible
install this technology in “El Realón”. In all the proposals the difference to install UV
disinfection or not it is 0.03€. With this low price and the strong advantages to install it,
we should recommend the proposals that include this technology. So we discard the
Proposals 1 and 3 because these proposals do not include UV disinfection.
The difference in the Proposals 2 and 4 is to treat 2 m3/s in “La Presa” by nanofiltration
or treat 3 m3/s in the same water-treatment plant. The economical difference between
these proposals is €0.22. Choose one option in this situation it is not easy. The line
“Alta 2” in “La Presa” treats the 90% of the flow in this water-treatment plant. So to
justify one Proposal or another it is necessary another study to know the water quality
difference between these two proposals and if this difference justify the economical
difference.
5. Conclusions
Nobody accept drink water with health risks. Treat water have costs: the investment
costs and the operation and maintenance costs. These costs are recovered by the water
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tariff. The current problem is how combine the less water tariff with the best water
quality. The new to this article is to combine improving water quality using cost
functions in order to find the best option to provide water quality with the least impact
on water tariff.
In this paper we have presented some options for improving water treatment in two
water purification plants in Valencia (Spain). We choose UV disinfection and a
Nanofiltration step to improve water quality and to minimize the risk to human health.
After, we combine these technologies in four proposals to improve water quality. The
next step is known how much these technologies cost using EPA cost functions to
predict the investment and de operation and maintenance costs.
Then, we modify current water tariff to finance these proposals. The aim for this change
is provide water quality with the least impact on water tariff. The results show that an
increase around 1€ per month (sometimes a little bit higher). This highlights the
importance of combining water quality and the cost of technologies to improve the
water tariff when making decisions to improve the drinking water service.
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